And analysts have described the prediction, by the German Council of Economic Experts, as a “wake-up call” to Merkel and her government colleagues. In March, the collective of economists had projected a GDP increase of 3.1% in 2021.
However, a report released on Wednesday significantly revised that figure downward to 2.7%.
Joachim Lang, Managing Director of the Federation of German Industries (BDI) said: “The report is a wake-up call for German politics.
“Tensions in supply chains have weakened production and exports.
Mr. Lang warned, “The coming months promise little improvement.
“Lack of raw materials, chips and intermediate products, as well as port congestion and insufficient container capacities, will continue to affect the industry.
“For a recovery to resume, politics and business must work together to overcome these tensions.”
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The future federal government – whatever it is – must create “an environment conducive to transformation towards a climate neutral economy,” Lang said.
He said: “Massive investments are needed – from private and government sources.
“The new budget must provide answers to crucial funding questions so that the necessary investments can be made quickly.
“This can only be achieved if planning and approval procedures become simpler and faster. “
The Council expects stronger growth of 4.6% next year.
Council Member Volker Wieland said: “Fiscal policy should be normalized after the crisis, sustainability and crisis resilience of public finances should be further strengthened.
“Monetary policy best contributes to sustainable economic growth by ensuring price stability.
“A standardization strategy should be published for this purpose. “
Colleague Monika Schnitzer underlined: “Germany needs a coherent and comprehensive digital strategy at federal level which prioritizes measures, links different initiatives more closely and avoids duplicate structures. “
(Additional report by Monika Pallenberg)